A ticking Time Bomb is About to Explode

There are two quasi-governmental organizations: Fannie Mae and Freddie Mac, who have a major hand in the home mortgage market. They are known as 'government sponsored private corporations', as can been read on Fannie Mae's website:

1968 Charter ActThe 1968 Charter Act split Fannie Mae into two parts: Ginnie Mae and a reconstituted Fannie Mae. Ginnie Mae would continue as a federal agency and be responsible for the then-existing special assistance programs, and Fannie Mae would be transformed into a "government-sponsored private corporation" responsible for the self-supporting secondary market operations. The reconstituted Fannie Mae was to be stockholder-owned and managed. Fannie Mae retired the last of its government stock on September 30, 1968, and transformation to a government-sponsored private corporation was completed in 1970.

As is inevitable whenever government tries to get involved in commerce, they have done more harm than good. Clinton administration officials Franklin Raines and Jamie Gorelick earned huge paydays while they worked at Fannie Mae, although neither of them were remotely qualified to work in finance.

Now that these 'government sposonred' businesses have gotten themselves in trouble with the home mortgage mess, both the US Treasury and Federal Reserve are planning to bail them out. This will enable Fan and Fred to continue to make the same mistakes they have in the past, and to provide well-paid sinecures for politically-connected people like Gorelick and Raines.

What a stupid idea!